If the Previous Period's Financial Statements Are Unaudited, and Sufficient

question 1

Multiple Choice

If the previous period's financial statements are unaudited, and sufficient appropriate evidence is unavailable, then the current auditor's report will be:

• A) qualified on the basis of scope limitation.
• B) unqualified on the basis that the comparatives are unaudited and no opinion is expressed on them.
• C) qualified on the basis that the comparatives are unaudited and an opinion is expressed on them.
• D) qualified on the basis that the comparatives are unaudited and no opinion is expressed on them.

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Definitions:

Economic Profit

The excess of total revenue over the complete aggregation of both transparent and hidden costs.

Marginal Revenue

The supplementary income a company accrues from the sale of one additional unit of a product or service.

ATC

Average Total Cost, the total cost of production divided by the number of units produced, representing the average cost per unit of output.

Profit-Maximizing Rule

A principle that states a firm reaches its highest profit when its marginal cost equals its marginal revenue.